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What Brexit means for the world: Reading experts comment – University of Reading

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What Brexit means for the world: Reading experts comment

Release Date 24 June 2016

Ballot Box

Britain has voted to leave the European Union. But what comes next? Some of the University of Reading's academics share their expertise on what Brexit will mean for the growing far right of European politics; for the future of the USA and Latin America; for the financial markets and the economy; and for the future of the European political project.

Dr Daphne Halikiopoulou, an expert on the far right in European politics at the University of Reading, said:

“Europe’s growing group of far right politicians are those with the most to gain from Britain’s decision to leave the EU. Leaders of France’s National Front, Alternative for Germany and the Northern League in Italy are all delighted with the Brexit result. Marine Le Pen, leader of the Front National, is rejoicing. She and other anti-EU leaders will be hoping for a domino effect that destroys the European project.

'Far right politicians are those with the most to gain from Britain’s decision to leave' -- Daphne Halikiopoulou

“The victory for Leave seems to send a clear message to the rest of Europe that campaigning on migration, identity and nationalism is a legitimate way of gaining support with an electorate that is suffering economically. This is particularly worrying in parts of the continent where the far right already has a strong foothold.

“The far right will take this as a democratic mandate for their views. They will argue that previously fringe views on migration and identity are now firmly in the mainstream.”

Dr Tom Long, an expert on US and Latin American international relations at the University of Reading, said:

“The immediate impact of Brexit on Latin America is to create additional economic uncertainty in what is already a challenging environment. Many Latin American economies have been hit hard by falling commodity prices. In the near-term, the referendum results will exacerbate that. Market turmoil will continue to drive up the US dollar, increasing borrowing costs for countries that are already in the red. 

'(Brexit) reduces British influence in Latin America' -- Tom Long

“For Latin American countries that have recently negotiated or are currently negotiating free trade agreements with the EU, the eventual absence of the UK reduces the value of those deals somewhat. Some may eventually seek separate agreements with the UK, but it is not likely to be a high priority. Certainly nothing can be arranged until the terms of the UK's exit are clearer. A more immediate concern for Latin American governments will be securing the main European sources of investment through the EU. For most countries, that means Spain, the Netherlands, and Germany. It's a bit of a different story for small economies of the Anglophone Caribbean, but not a more positive one given the general turmoil and possible reduction in market access.

“Politically, the immediate response in Latin America seems to be disbelief. The continent has long idealized and struggled for greater integration (though with many disagreements about what that should mean). Brexit flies in the face of that. Given the experiences of many Latin Americans living in the United States, there is little sympathy for the anti-immigrant sentiments that fuelled much of the Leave campaign. In short, I don't see many silver linings for Latin America from a British departure. It reduces British influence in Latin America, too.

“In the United States, the political picture is more mixed. Certainly, most of the business and political establishment was hoping for decisive Remain, as President Obama clearly stated. The United States has a strong interest in both a more integrated UK and in a more liberal EU. Both of those are now under severe threat, and on the whole that is bad news for U.S. companies. It also complicates U.S. security relationships, though there will be an emphasis on maintaining those. In terms of public opinion, there is a sector of the U.S. electorate that has long been skeptical of international organizations and that will celebrate Brexit. The messages of the Leave campaign will have resonated with many Tea Party supporters in the United States, which shared similar emphases on stopping immigration and purging supposedly unresponsive and unaccountable politicians and bureaucrats. The reception of the results of the referendum will largely mirror the political divisions that have been so evident during the U.S. presidential campaign.”

Professor Adrian Bell, head of the ICMA Centre for Financial Markets at the University of Reading, said:

“We are experiencing the biggest losses in financial markets ever caused by a democratic political event.

'The fact that investors are bailing out of bank stocks shows that the market now expects a wider economic downturn' -- Adrian Bell

“Today’s huge turbulence show that the markets were as bad as everyone else at predicting a Brexit. The value of leading companies have plummeted, hitting investors and pension funds hard. Others will  have made fortunes by buying up shares at the bottom of the market and immediately selling them as they have made partial recoveries.

“Shares in banks have taken a pummelling. Banking is heavily exposed to the fortunes of the wider economy. The fact that investors are bailing out of bank stocks shows that the market now expects a wider economic downturn.”

Dr Jonathan Golub, a European politics specialist and head of the Department of Politics and International Relations at the University of Reading, said:

“All the signs so far, from reactions of the markets and world leaders, suggest that this could be the biggest own goal scored by Britain in its modern history.

“Crucially what happens next is almost more important than the referendum result for the future of Britain’s prosperity, and for the future of Europe as a whole.

“The least bad option for the UK and the rest of Europe would be for Britain to negotiate a settlement which re-establishes most parts of its previous relationship with the European Union. Even many Eurosceptics will slowly warm to this option during a 'period of reflection' as they realise the scale of the Leave campaign's dishonesty.

“But if Britain decides to throw its weight around in pursuit of Leave's misguided agenda, creating conditions for further disaffection with the EU among voters on the continent, we could see an unravelling of the entire European project. That would be bad for the prosperity and security of Britain, Europe and the world.

“Which future comes to pass will very much depend on who the UK sends to the negotiating table in the months and years ahead. A negotiation led by hardliners and fantasists is likely to lead to the worst possible future.”

'This could be the biggest own goal scored by Britain in its modern history' -- Jonathan Golub

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